Investors: This Top TSX Stock Is a Screaming Buy Today!

Hre’s why goeasy remains a top buy, despite a 150% gain since March 2020

| More on:
TIMER SAYING TIME FOR ACTION

Image source: Getty Images

While the equity markets have rallied significantly from March lows, value investors can still find quality stocks at a bargain. One top Canadian stock on the TSX that has created massive investor wealth is goeasy (TSX:GSY).

goeasy stock is currently trading at $56, which is 30% below its record high. The stock slumped to a multi-year low of $21.08 during the recent bear market but rebounded over 150% in the next four months.

goeasy is a Canadian-based company that provides non-prime leasing and lending services through its easyhome and easyfinancial businesses. It has a wide portfolio of financial products that include unsecured and secured installment loans among others.

The company has served over a million Canadian customers and originated $4.2 billion in loans. It has managed to grow revenue from $65.9 million in 2001 to $609 million in 2019, a compound annual growth rate of 13.1%.

Even during the ongoing pandemic, goeasy is forecast to increase sales by 4.1% to $635 million in 2020, while earnings might rise 2.1% to $5.28 a share.

A look at its business segments

goeasy’s easyfinancial is its financial services arm, which provides installment loans to customers who have limited access to traditional banking products. The easyfinancial offering consists of unsecured and real estate secured installment loans ranging from $5,000 to $45,000 with interest rates starting at 19.99%.

In the last four quarters, easyfinancial sales were $497.4 million with an operating profit of $199.3 million and gross consumer loans at $1.17 billion.

easyhome is Canada’s largest lease-to-own company. It offers household furniture, appliances, and electronics to consumers under weekly or monthly leasing agreements. goeasy targets customers who are looking for alternatives to traditional retailers and who do not have sufficient resources to buy merchandise or who do not want to make a long-term obligation with these purchases.

In the last four quarters, easyhome sales were $139.3 million with an operating profit of $24.7 million and lease assets at $47.7 million.

What makes goeasy a solid long-term bet

goeasy estimates Canada’s non-prime consumer lending market at $231 billion. Its high-growth lending operation is complemented by a mature leasing business, and the company remains optimistic about new revenue sources from a large non-prime consumer market.

goeasy has managed to increase earnings and revenue for 75 consecutive quarters. Its earnings have grown at an annual rate of 23.8% since 2001 while total shareholder returns are close to 4,500% in the last two decades.

It has a robust risk-management framework with a healthy net debt-to-capital ratio of 72%. The company said it will use available cash and borrowing capacity to fund growth through to the fourth quarter of 2021.

goeasy stock is trading at a market cap of $800 million, which means its forward price-to-sales multiple is 1.25. The company’s price to earnings is just above 10, and we can see that the stock is trading at an absolute bargain. Further, the stock also pays a dividend of 3.2%, making it attractive to income investors as well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. 

More on Dividend Stocks

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

For growth and dividends this April, look to these two REITs that have quite the promising present as well as…

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »